HDFC Bank won't cut interest rates on consumer durable loans

HDFC Bank today said it will not reduce interest rates for consumer durable loans ahead of the festive season, although state-owned lenders might do so, on a call by the Finance Ministry to boost demand.

"No, we will not be reducing the interest rates (on consumer durable loans). We are already providing such loans at a competitive rate," HDFC Bank managing director Aditya Puri told PTI.   

At a meeting with Reserve Bank Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram to infuse an additional capital into public sector banks, Finance Minister P Chidambaram had said he would meet heads of PSU banks soon to impress upon them the need to lower interest rates for select sectors.   

The capital infusion, over and above the Budget provision of Rs 14,000 crore, comes ahead of the festival season and is aimed at providing cheaper loans for auto and consumer durables to push demand and promote economic growth.   

"Lower interest rates will depend on the lending capacity of banks. Banks to decide on sector where lower rates will boost demand. I will meet bankers soon," Mr Chidambaram said.   

He said this will bring relief to consumers, specifically the middle class and boost capacity infusion, employment and production.   

As per the latest industrial output data, the output of the consumer durables sector declined by 9.3 per cent in July, from a growth of 0.8 per cent in the same month last year. The segment saw a 12 per cent decline in output in April-July compared with growth of 6.1 per cent.